Challenges and Potential Solutions to Unlock FLNG Growth ?   What are the challenges ?   What is needed from industry and project sponsors ?   Opportunities to reduce cost ?

FLNG 2013 London, 12 June 2013

Claudio H. Steuer Principal

SyEnergy Limited claudio.steuer@SyEnergy.co.uk

Floating LNG 2013  

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A brief word about SyEnergy…

  Energy consultancy focused on strategy, business development and commercial issues

  25+ years with Shell, ENI, Saipem, Centrica, Blue Power, Hoegh LNG, and Gas Strategies

  Advised clients on energy projects located in West, East & North Africa, South America, USA, Caribbean, Europe, Caspian, Indonesia and Australia.

  Strategy formulation, market entry plans, supply procurement, commercial negotiations

  Upstream and midstream gas/LNG/FLNG business development and commercialisation

  Gas supply planning, infrastructure development, domestic and export gas market studies

  Project contracts, sales & purchase agreements, price reviews, and dispute resolution

  Advice and implementation support focused on long term sustainable value creation

  Independent project assurance reviews and commercial due diligence

  Provision of bespoke energy training

A complete list of services, previous assignments, downloads and links at www.syenergy.co.uk

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Garden secrets

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What are the challenges ?

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Project Sponsors Feasible Project

Return on Investment Operating Environment

Resource Holder Government Take

Domestic Gas Market Local Content

Financial Community Legal & Fiscal Stability

Sustainable Development Robust Cash-Flow

People

Process Projects

Challenging business environment

  Weak global macroeconomic scenario

  Energy demand uncertainties

  Unpredictable timing of new major sources of supply – Iraq, Kazakhstan, Brazil

  Significant and spreading impact from unconventional energy – oil and gas

  USA top crude producer by 2020 and energy independent by 2030

  Geopolitical influence : Iran, Venezuela, Russia

  Significant energy price disconnect and risk

  New reserves are technically complex and costly to develop

  LNG project costs at unprecedented and persistent high cost $/ton

  Firm long term commitments still required for LNG

  Limited industry executive capacity

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7 Source: Economist

Stakeholder alignment…

Decision making…

8 Source: Economist

What is needed from the parties ?

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  Industrial policy   Clear regulation   Stability of terms

Resource Holder

Technology Providers

  Reliability   Commercially proven   Performance guarantees

Project Sponsors

  Quality front-end plan   Resourceful business development   Operational competence

Finance Partners

  Transaction cost reduction   “Fit for purpose” solutions   Smaller, but many deals

Not all FLNG projects are created equal…

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Each solution has its own requirements and benefits…

On-shore LNG FLNG sFLNGMin Size Economic Feasibility ~5 - 10 Mtpa ~2-4 Mtpa ~0.5-2.0 Mtpa

Reserve Requirement (20 years) 5 - 10 Tcf ~2 - 4 Tcf ~0.5 - 2 Tcf

Gas Supply Upstream Portfolio (AG & NAG) Single or Multi-field Single

Gas Transmission System Multi-Field System Direct from Field(s) Onshore or Offshore

On-Shore Facilities Liquids, Utilities, Living, Roads, etc. All in FPSO and/or Platform All in Barge and/or Platform

Storage & Jetty ~2 LNG Tanks & Expensive Jetty LNG FPSO Barge and/or LNG Tanker

Loading / Unloading Operations Channel Traffic, Tugs, Port Fees Side by Side, Tandem, Flex. Hoses Side by Side, Tandem, Flex. Hoses

Liquefaction Tech Providers APC, CoP, Shell, Linde, Axens APC, Shell, B&V PRICO, Linde SMRs, Nitrogen Expander

Sponsors & Business Model Multi-Party JV, Vertically Integrated Multi-Party JV, New Models Single JV, New Models

Liquefaction Service Fee Unlikely. EPC Plant. JV Ops Control FPSO Provider Charter & Operation Operated/Leased or Buyer Financed

Project Permitting Large Site, Safety Contours, NIMBY Normal FPSO Barge

Start-up after FID ~40 - 60 months ~48 months ~36 months

Typical $/tonne ~ $1,200 - $1,800 ~$1,500 ~$700 - $1,000

Conclusions

  Have you hugged your FLNG project sponsor today ?

  Alignment of all key stakeholders remains the main challenge

  Design in synergies and cost savings early for valuable outcomes

  Encourage S.M.A.R.T government policies & objectives

  Front-end planning to consider “asset view” and “market view”

  Be patient… no results overnight… be firm on the direction

  “You miss 100% of the goals… that you do not kick the ball”

  Doing the right innovative things = competitive advantage

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Garden secrets

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Garden secrets

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Thank You !

FLNG 2013

London, 12 June 2013

Claudio H. Steuer Principal, SyEnergy Limited

claudio.steuer@SyEnergy.co.uk